Inflation could remain elevated for longer than expected, posing a risk to the US economy’s near-term health, JPMorgan Chase Chief Executive Jamie Dimon said Monday.
In his annual letter to shareholders, Dimon pointed to “persistent inflationary pressures” that belie the stock market’s confidence about the outlook and could result in even higher interest rates.
“Equity values, by most measures, are at the high end of the valuation range,” said Dimon, the longtime CEO of the biggest US bank by assets, who has often struck a cautious note about the outlook in recent years.
“These markets seem to be pricing in at a 70 to 80 percent chance of a soft landing — modest growth along with declining inflation and interest rates. I believe the odds are a lot lower than that.”
Dimon pointed to ongoing fiscal investment, trade policy shifts and green economy spending as inflationary drivers in spite of many economic indicators that have remained “good.”
He said the bank is prepared for a “very broad range of interest rates,” from two percent to eight percent.
Dimon, who tackled a broad range of issues in the letter including artificial intelligence and political acrimony in the United States ahead of November’s presidential election, also highlighted a more precarious geopolitical environment.
He called the February 2022 Russian invasion of Ukraine “another day in history that will live in infamy,” referring to Franklin D Roosevelt’s famous quote about the 1941 attack on Pearl Harbor.
Dimon also nodded to “the subsequent abhorrent attack on Israel and ongoing violence in the Middle East” as events that serve as a reality check.
“America and the free Western world can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims — particularly against what they perceive as weak, incompetent and disorganized Western democracies,” Dimon said.
